Philips Electronics Fighting $350 Million Investor Claim

Dec. 10 (Bloomberg) -- Royal Philips Electronics NV, the
world’s largest lighting company, faced allegations of
defrauding an Italian television maker out of 200 million euros
($258 million) plus interest as a trial began today in Delaware
Chancery Court.

Vichi contends that because the CRT venture went bankrupt,
Amsterdam-based Philips is responsible for returning his note-based loan, which with interest now amounts to $350 million.

“I thought it was as safe as the Bank of Italy,” said
Vichi, speaking in Italian through an English interpreter in a
video presentation. “I felt I could rely on Philips to pay back
the loan. I trusted them completely,” he said.

“If Mr. Vichi had known the true facts,” he wouldn’t have
agreed to buy the notes, according to the 2006 complaint filed
in Wilmington.

Philips counters that the “salesmen on whose
representation plaintiff claims to have relied were never
employed by Philips” or “authorized to do anything on its
behalf,” and that Philips “cannot be liable for anything
done,” according to Philips’s Nov. 30 pretrial brief.

Oral Agreements

Vichi said his Milan-based company bought TV parts from
Philips for almost six decades, often doing business with oral
agreements. Vichi acquired the notes of LG.Philips Displays
Finance LLC, a Delaware corporation, in 2002, believing he would
be repaid, according to the complaint.

The venture’s Dutch parent went bankrupt in January 2006.
LG.Philips Displays USA Inc., an affiliate that makes cathode-ray tubes for TVs and computer monitors, sought bankruptcy
protection in Delaware two months later.

“I always thought it was a different department” of
Philips, Vichi said of the venture. “Philips was written in big
letters on the loan, the people talking to me always talked
about Philips” and the representatives “had Philips business
cards” and stayed at Philips offices while visiting, he said.

Judge Donald Parsons Jr. is presiding over the non-jury
trial, scheduled to last a week. He hasn’t said when he’ll make
a decision on the case.

Price-fixing in the cathode ray tube industry between 1996
and 2006 brought a fine of 313.4 million euros to Philips, the
European Commission announced last week.

Agreements among groups of companies were designed to halt
slowing sales of the bulky tubes after customers switched to
slimmer liquid-crystal and plasma display sets, according to the
commission. Philips is appealing the penalty.